Other attributes
A layer 1 network in blockchain technology, is a network that acts as infrastructure for other applications, protocols, and networks to build on top of (layer 2 networks). The primary characteristic defining how a public decentralized layer 1 network operates (speed, security, throughput, etc.) is the consensus mechanism.
Layer 1 networks are the underlying architecture responsible for the settlement of transactions. Typically this means accounting for user wallets, via asymmetric key pairs and their corresponding cryptocurrency or token balances.
Layer 1 networks have a native token providing access to the network's resources and paying for the network services, such as transferring cryptocurrency, minting a token, or calling a smart contract. While all layer 1 networks support transactions, the specific services provided by each network vary.
Examples of layer one networks include the following:
- Bitcoin
- Ethereum
- Algorand
- Cardano
- Hedera
Combining layer 1 networks with layer 2 is seen as a solution to scalability issues within blockchain technology. Bitcoin for example is considerably affected by scalability issues, with the underlying network relying on an adequate number of miners to ensure higher transaction throughput and volumes are possible.
While a layer 1 network describes the underlying main blockchain architecture, layer 2 networks are an overlaying network that lies on top of the underlying blockchain. Layer 2 networks are third-party integrations that combine with layer 1 to increase system throughput. Examples of layer 2 network solutions include state channels and nested blockchains.
Layer 1 scaling solutions augment the base layer of the blockchain protocol to improve scalability. A number of different methods are being developed to improve the scalability of blockchain networks directly. They change the rules of the protocol directly to increase overall network throughput via an increase in transaction capacity and speed while accommodating more users and data. Layer 1 network solutions could entail increasing the amount of data contained in each block or accelerating the rate at which blocks are confirmed.
The most common layer 1 network scalability solutions are:
- Consensus protocol changes—transferring from proof of work to proof of stake protocols, and
- Sharding—breaking up the entire blockchain into distinct datasets known as "shards," such that all nodes no longer need to maintain the entire network.
